Lords object to quotas for number of women on boards

20 December 2012

The House of Lords EU Committee has today published a report that objects to a European Commission proposal to introduce mandatory quotas for the number of women on corporate boards.

This is the Committee’s second report on the subject. The Committee previously conducted an inquiry into mandatory quotas for women on corporate boards, offering its view on the expected Commission proposal before it was published on 14 November 2012. The report on this inquiry was published on the 9 November 2012.

The Committee has objected to the proposal on the grounds that the efforts made by businesses and governments at national level, mean that action at EU level is unnecessary, and would not provide additional benefits. The Committee suggests that the proposal does not adequately take into account the different rates of change, board structures and cultural contexts within each Member State. It reiterates support for the aim of increasing gender diversity on boards, but says that the Commission could usefully assist national Governments through other means, such as issuing a non-binding Recommendation to Member States, and taking further action where individual Member States fail to comply with their obligations to combat discrimination.

Committee Chairman, Baroness O’Cathain, said:
"Although the Committee welcomes the positive steps already taken by many Member States to ensure more gender-balanced boards and senior management teams – particularly in the UK – the number of women at the top remains far too low.

More balanced boards are to everybody’s benefit. We found that they will be more able to tap into the wealth of available talent in the labour market, provide a broader spectrum of ideas and improve corporate governance. However, we are not persuaded that the only way to stimulate change is through the introduction of EU quotas.

National governments are already signed up to the benefits of more women on boards, and there has been real progress. More than a third of people appointed to FTSE 100 boards last year were women, and FTSE 100 companies are expecting to see a quarter of their board positions taken by women by 2015. Across the EU as a whole, the proportion of women on boards has risen by 16% since 2010. Business leaders and national governments need to be given a chance to build upon these efforts before we consider quotas.

The Commission should at this stage seek to support and better monitor these efforts, and only step in with stronger measures as a last resort where the business world has shown itself to be unwilling and unable to change its ways. To introduce quotas now, though, would do more harm than good and risk derailing efforts to deliver more sustainable change.

By working together in partnership, the Government and the EU can ensure that all of the talent in our jobs market is used to the full, regardless of gender."

The Committee maintains that the proposal does not comply with the principle of subsidiarity, which means that legislation should be made at the lowest appropriate level - in this case, by each country.

A debate on the report will be held in the House on 10 January 2013. If the House agrees with the report after the debate, it will send a "reasoned opinion" to the European Commission and other EU institutions, to signal its concern.

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